You Lying, Cheating Dog, You

Most of us lie, at least a touch.  Maybe cheat a little bit, too.

But it’s interesting to explore just why, and when, we do so. That’s the subject of a charming little piece in the current Harvard Business Review (February 2008, paper only) called “How Honest People Cheat,” by Dan Ariely.

A simple experiment. Give a few thousand people math problems to solve for money. Use a control group to establish average scores. Then rip up the exams in front of the test groups, and ask them to self-report how well they did.

The control group got 4 of 20 right. The test groups, on average, reported getting 6 of 20 right. By one measure, they cheated by 50%. By another, they cheated 12.5% of the available opportunity to cheat.

Then the researchers made it interesting.

1. They varied the risk of getting caught. Result? No change at all.

2. They substituted poker chips (redeemable later for money) for money itself. Result: a doubling of cheating.

3. They preceded the test by having participants reflect on their own standards of honesty, e.g. the Ten Commandments or an honor system. Result: complete cessation of cheating.

Ariely draws three conclusions:

1. Most of us will cheat a little, given the opportunity
2. Our consciences impose limits even when there’s no risk of sanctions
3. Non-monetary exchanges allow people to cheat more, e.g. backdating stock options.

Ariely seems to make the most of the third one, suggesting it explains Enron, for example.

I would emphasize it another way.  This elegant little study suggests that the threat of individual punishment carries far less weight than does the exhortation to do right by a group norm.

Now, it’s quite a leap from a small study to suggesting that prisons should focus on rehabilitation rather than punishment and retribution—but that’s the direction.

It’s a leap to say that white collar crime will be deterred less by Elliot Spitzer-like prosecutions than by airing criminal behavior to the disapproval of a broad public—but that’s the direction.

If you can’t trust someone, do you follow Ronald Reagan and “trust, but verify?”  Or do you have a sit-down with them about their responsibilities to be trustworthy? Let’s just say this study is anti-Reagan. 

At root, this study reminds us that much of individual behavior is not explained by that old economist standby, the “rational, self-aggrandizing homo economicus,” who does all that he does in order to improve his own economic well-being.

It suggests that human beings are also—very much—social creatures. We even build our own personal values systems (aka consciences) based on our sense of what furthers our relationships to other human beings.

Is that so hard to understand?